EXHIBIT 10.3
NOTE: THIS AGREEMENT CONTAINS CONFIDENTIAL & PROPRIETARY INFORMATION AND MAY NOT
BE DISCLOSED WITHOUT THE CONSENT OF BOTH PARTIES OR AS REQUIRED BY LAW
GUARANTY AGREEMENT
BETWEEN
THE EDUCATION RESOURCES INSTITUTE, INC.
AND
NAME OF BANK
This Guaranty Agreement (this "Agreement") is made as of this day of ,
, by and between The Education Resources Institute, Inc. ("▇▇▇▇"), a private
non-profit corporation organized under Chapter 180 of the Massachusetts General
Laws with its principal place of business at ▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and NAME OF BANK, (the "LENDER"), a []organized
under the laws of the []and having a place of business located []
WHEREAS, ▇▇▇▇ is in the business of providing financial assistance in
the form of loan guaranties to and on behalf of students enrolled in programs of
higher education and their parents at ▇▇▇▇-approved schools; and
WHEREAS, the LENDER is willing to make Loans to eligible Borrowers
under the Program, and ▇▇▇▇ is willing to guaranty the payment of principal and
interest against the Borrowers' default or certain other events as more fully
described below, in accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, ▇▇▇▇ and the LENDER agree as follows:
SECTION 1: DEFINITIONS
As used in this Agreement the following terms shall have the following meanings:
1.1 "Borrower" shall mean the person, or all persons collectively,
including all students, cosigners, coborrowers, guarantors, endorsers,
and accommodation parties, who execute a Promissory Note individually
or, in the case of multiple Borrowers, severally and jointly, for the
purpose of obtaining funds from the LENDER under the Program.
1.2 "Custodian" shall mean U.S. Bank National Association, its successors
and assigns, in its capacity as Bank under the Security Agreement of
even date herewith and as Depository Institution under the Control
Agreement of even date herewith (together, "Security Documents"), or a
successor Bank or alternative Depository Institution appointed in
accordance with the Security Documents.
1.3 "Due Diligence" shall mean the utilization by the LENDER of policies,
practices
1
and procedures in the origination, servicing and collection of Loans
that comply with the standards set forth in the Program Guidelines and
that comply with the requirements of federal and state law and
regulation.
1.4 "FMC" shall mean The First Marblehead Corporation, a Delaware
corporation located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1.5 "Guaranty Claim" shall mean a claim by the LENDER to ▇▇▇▇ for a
guaranty payment with respect to a Loan pursuant to Section 2.1 of this
Agreement.
1.6 "Guaranty Event" shall mean any of the following events with respect to
a Loan:
a. failure of a Borrower to make monthly principal and/or
interest payments on a Loan when due, provided such failure
persists for a period of one hundred eighty (180) consecutive
days,
b. the filing of a petition in bankruptcy with respect to a
Borrower, or
c. the death of a Borrower.
For Loans on which the Borrower is two or more persons, none of the
above, with the exception of paragraph b., shall be a Guaranty Event
unless one or more such events shall have occurred with respect to all
such persons. The foregoing notwithstanding, if a Borrower files a
petition in bankruptcy pursuant to Chapter 7 of the U.S. Bankruptcy
Code and does not seek a discharge of the affected Loan(s) under 11
U.S.C. ss.523(a)(8)(B) of the U.S. Bankruptcy Code, the LENDER at
TERI's request will withdraw its guaranty claim unless or until one of
the other Guaranty Events shall have occurred with respect thereto.
1.7 "Loan" shall mean a loan of funds, including all disbursements thereof,
made by the LENDER to a Borrower under the Program.
1.8 "Note Purchase Agreement" means the agreement of that name between
LENDER [OR WAREHOUSE] and FMC dated as of [DATE], as it may be amended
from time to time.
1.9 "Program" shall mean the _____________________________________, as more
fully described in the Program Guidelines.
1.10 "Program Guidelines" shall mean the [PROGRAM NAME] Program Guidelines
attached hereto as Exhibit A, and all changes thereto as provided in
Section 6 hereof. The Program Guidelines (a) consist of the Program
Overview, the ▇▇▇▇ Underwriting, Origination and Loan Term Guidelines,
the Servicing Guidelines, and Program Borrower Documents (consisting of
the forms of Promissory Note and Truth in Lending Disclosure) and (b)
are hereby incorporated in this Agreement by reference and made a part
hereof.
2
1.11 "Promissory Note" shall mean a promissory note executed by a Borrower
evidencing a Loan, in the form attached hereto as part of the Program
Guidelines or as approved pursuant to Section 3.2 below.
1.12 "Securitization Transaction" shall mean and refer to (a) a purchase of
Loans guaranteed hereunder by a special purpose entity ("SPE") formed
by FMC, which purchase is funded through the issuance of debt
instruments or other securities by such entity, the repayment of which
is supported by payments on the Loans or (b) any other transaction
whereby a Loan is transferred from the LENDER to FMC or one of its
affiliates.
1.13 "Security Documents" shall have the meaning assigned to it in Section
1.2.
SECTION 2: GUARANTY OF LOANS
2.1 ▇▇▇▇ hereby guarantees to the LENDER, unconditionally except as set
forth in Section 2.2 below, the payment of 100% of the principal of and
accrued interest on every Loan as to which a Guaranty Event has
occurred. "Accrued interest" shall mean interest accrued and unpaid to
the date of payment in full by ▇▇▇▇ of a Guaranty Claim, less any
interest that shall have accrued after the filing of a Guaranty Claim
but before ▇▇▇▇ shall have received all the documentation necessary to
process the Guaranty Claim as set forth in the Program Guidelines. ▇▇▇▇
will use all reasonable efforts to make payment on its guaranty within
sixty (60) days, and will in any event make payment within ninety (90)
days, of receipt by ▇▇▇▇ of a Guaranty Claim from the LENDER stating
the name of the Borrower and the type of Guaranty Event that has
occurred accompanied by the full claim documentation required in the
Program Guidelines.
2.2 TERI's guaranty is conditioned upon the following:
a. The LENDER must have filed its Guaranty Claim within the time
period and following the procedures specified in the Program
Guidelines.
b. The LENDER and its predecessors in interest must at all times
have exercised Due Diligence with respect to the Loan in
question (or shall have cured any failure to exercise Due
Diligence under the reinstatement provisions in Section 2.4
hereof and the Program Guidelines), and must have complied
with all other requirements of the Program Guidelines
applicable to the Loan.
c. The LENDER shall have paid to ▇▇▇▇ the Initial Guaranty Fee
(as defined in Section 3.3.a. below) for the Loan in question,
and shall have paid to the Custodian any Subsequent Guaranty
Fee (as defined in Section 3.3.b. below) for the Loan in
question which is due and payable as provided in Section
3.3.b. below.
3
d. ▇▇▇▇ must have received from the LENDER the original
Promissory Note relating to the Loan in question, enforceable
against the Borrower (except as provided in this Section
2.2.d., below), endorsed to ▇▇▇▇ in such manner as to transfer
to ▇▇▇▇ all rights in and title to such Promissory Note, free
and clear of all liens and encumbrances, and of all defenses,
counterclaims, offsets, and rights of rescission that might be
raised by the Borrower. Submission of a Guaranty Claim to ▇▇▇▇
shall constitute the LENDER's certification that the
conditions of 2.2.b. and 2.2.d. have been met, and ▇▇▇▇ is
entitled to rely on such certification.
Subsections 2.2.b. and 2.2.d. above notwithstanding, if a Loan
that is the subject of a Guaranty Claim was originated by ▇▇▇▇
on behalf of the LENDER pursuant to a Loan Origination
Agreement between the parties, (i) ▇▇▇▇ will not deny the
LENDER's Guaranty Claim on such Loan if the sole basis for
denial is a violation of the Program Guidelines or a violation
of Massachusetts or federal law committed by ▇▇▇▇ in the
origination process, and (ii) ▇▇▇▇ will have no recourse
against the LENDER in the event that TERI's actions or
omissions in the origination process shall have given rise to
a successful defense in favor of the Borrower in a suit on the
Promissory Note relating to such Loan.
2.3 TERI's guaranty obligation with respect to any Loan shall not be
terminated or otherwise affected or impaired (i) by the LENDER's
granting an extension of time to the Borrower to make scheduled
payments, or by any other indulgence the LENDER may grant to the
Borrower, provided that all extensions and other indulgences meet the
forbearance standards and other requirements of the Program Guidelines;
or, Section 2.2.d. above notwithstanding, (ii) because of any fraud in
the execution of the Promissory Note relating to such Loan, (iii)
because of any illegal or improper acts of the Borrower, or (iv)
because the Borrower may be relieved of liability for such Loan due to
lack of contractual capacity or any other statutory exemption.
2.4 ▇▇▇▇ may deny the LENDER's Guaranty Claim on any Loan on the grounds of
Due Diligence deficiencies. If ▇▇▇▇ properly denies the LENDER's
Guaranty Claim on any Loan on the grounds of Due Diligence
deficiencies, the LENDER may thereafter require that ▇▇▇▇ reinstate the
guaranty of such Loan if (a) the LENDER corrects such deficiencies and
receives four (4) consecutive full on-time monthly payments from the
Borrower, according to any schedule permitted by the Program
Guidelines, and if at the time of the LENDER's request the Borrower is
within thirty (30) days of being current on all principal and interest
payments on such Loan, or (b) the LENDER satisfies any other method of
cure set forth in the Program Guidelines.
2.5 TERI's guaranty hereunder is a continuing and absolute guaranty of
payment and not merely of collection, covering Loans made in accordance
herewith either (i)
4
prior to termination of this Agreement, or (ii) based upon applications
received by the LENDER prior to such termination; and such termination
shall not affect TERI's obligations to the LENDER then existing,
whether direct or indirect, absolute or contingent, then due or
thereafter to become due.
2.6 ▇▇▇▇ agrees not to exercise any right of subrogation, reimbursement,
indemnity, contribution or the like against the Borrower of any Loan
unless and until all of TERI's obligations to the LENDER under this
Agreement with respect to such Loan have been satisfied in full, except
to the extent that it is deemed a valid claimant as a contingent
creditor, for example, under Title 11 of the United States Code (the
"Bankruptcy Code"), or applicable state law.
2.7 ▇▇▇▇ will permit the LENDER, any duly designated representative of the
LENDER, or any governmental body having jurisdiction over the LENDER
(subject to written notice being provided to ▇▇▇▇ by the LENDER,
identifying the requesting party and the date of the review), to
examine and audit the books and records of ▇▇▇▇ pertaining to the
Loans, at any time during TERI's regular business hours, provided that
in the case of examinations by the LENDER or its representative, absent
good cause (i) ▇▇▇▇ must be given ten (10) business days' prior written
notice and, (ii) no more than one such audit may be conducted with
respect to any twelve-month period or will take place in any
twelve-month period. In no event will any audit be performed during
July, August, September, or October in any year except at the request
of a regulatory authority having jurisdiction over the LENDER.
2.8 ▇▇▇▇ will indemnify the LENDER and hold it harmless from and against
any loss, cost, damage or expense that the LENDER may suffer as a
result of claims to the extent they arise out of TERI's actions or
omissions relative to the LENDER's participation in the Program and do
not arise out of the LENDER's actions or omissions. "Expense" includes,
without limitation, the LENDER's reasonable attorney's fees. ▇▇▇▇ will
further indemnify the LENDER and hold it harmless from and against any
claim brought against the LENDER by any Borrower based on actions or
omissions of the LENDER that were mandated under the Program
Guidelines.
2.9 Although the LENDER agrees not to use any loan servicer not approved by
▇▇▇▇, the LENDER acknowledges that TERI's approval of a servicer is in
no way an endorsement of such servicer and that ▇▇▇▇ shall have no
liability to the LENDER for any losses arising from such servicer's
failure to comply with Due Diligence or the Program Guidelines or
applicable law, nor shall ▇▇▇▇ be required to honor any claim submitted
by such servicer if the claim does not comply with the requirements of
this Agreement.
5
SECTION 3: OBLIGATIONS OF THE LENDER
3.1 In originating, servicing, disbursing, and collecting Loans, the LENDER
will comply, and cause its servicer and others acting on its behalf to
comply, at all times with all Program Guidelines (including Due
Diligence requirements) and all applicable requirements of federal and
state laws and regulations.
3.2 The LENDER will use Promissory Notes, Loan applications, disclosure
statements, and other forms mutually agreeable to the parties. The
forms of Promissory Notes, Loan applications and disclosure statement
attached hereto as part of the Program Guidelines are agreed to be
satisfactory to both parties. Without limiting the generality of
Sections 3.1 and 4.1, the LENDER warrants the conformity of such
instruments and any agreed successors thereto with all applicable legal
requirements, other than those of federal and Massachusetts laws and
regulations, and ▇▇▇▇ warrants their conformity with Massachusetts and
federal laws. In addition, upon TERI's request, the LENDER will submit
to ▇▇▇▇ sample copies of promotional and marketing materials used in
connection with the Program. No such delivery of materials shall
constitute or be construed as a representation or warranty by ▇▇▇▇ that
such materials comply with applicable law or with the LENDER's
obligations under this Agreement, and no such delivery shall excuse the
LENDER's performance of any of its obligations under this Agreement.
3.3 The LENDER will pay a guaranty fee for each Loan (the "Guaranty Fee")
as follows:
a. At the time of each disbursement of the Loan, the LENDER will
promptly remit to ▇▇▇▇ __________ percent (_____%) of the
principal amount of the Loan disbursed (the "Initial Guaranty
Fee").
b. At such times as are set forth in Schedule 3.3 attached hereto
and incorporated herein by reference, such additional fees as
are set forth in the fifth and sixth columns of Schedule 3.3
("Subsequent Guaranty Fee").
i. If the terms of Schedule 3.3 call for any Guaranty
Fees to be paid concurrent with the Securitization
Transaction, the LENDER shall pay such fees directly
(and be reimbursed in the Securitization Transaction
to the extent provided in the Note Purchase
Agreement).
ii. In the event that a Guaranty Claim is made with
respect to a Loan before a Subsequent Guaranty Fee is
scheduled to be paid by the LENDER for such Loan, the
Subsequent Guaranty Fee shall become immediately due
and payable.
6
iii. In the event that a loan is prepaid in full prior to
the date that a Subsequent Guaranty Fee is scheduled
to be paid by the LENDER for such Loan, the
Subsequent Guaranty Fee shall nevertheless become due
and payable at the time that would have applied if
such prepayment had not occurred. For example, if a
Subsequent Guaranty Fee is due at the time of a
Securitization Transaction and a Loan is prepaid
before it is eligible for Securitization, then the
Subsequent Guaranty Fee with respect to such Loan
shall become due at the first Securitization
Transaction in which such Loan would have been
eligible for inclusion, had prepayment not occurred.
iv. In the event that FMC fails to purchase any Loan
under the Note Purchase Agreement, and the LENDER
sells such Loan to a third party, the Guaranty Fees
due with respect to such loan at the time of a
Securitization Transaction will instead be paid by
the LENDER at the time the loan is sold to the third
party.
v. In the event FMC has no further right or obligation
under the Note Purchase Agreement to purchase a Loan
in a Securitization Transaction, the LENDER shall pay
all Subsequent Guaranty Fees that are due to be paid
at the time of securitization as set forth in
Schedule 3.3. Such fees shall be payable (A) with
respect to any Loan already funded, within thirty
(30) days after presentation of an invoice by ▇▇▇▇ to
the Lender, and (B) with respect to Loans funded
after the date of such invoice, at the time of
disbursement.
vi. In the event that the LENDER fails to sell any Loan
to FMC because the LENDER has breached the Note
Purchase Agreement, the LENDER shall pay all
Subsequent Guaranty Fees that are due to be paid at
the time of securitization as set forth in Schedule
3.3. Such fees shall be payable directly to ▇▇▇▇ and
shall not be subject to the Security Documents.
c. Failure to remit any Guaranty Fee within thirty (30) days of
the time set forth above will not affect the validity of the
guaranty for any Loan for which the Guaranty Fee has already
been paid in full, but, as a result, ▇▇▇▇ will have the right,
at its discretion to (i) void its obligation to guarantee or
collect the Loan to which such Guaranty Fee relates or (ii)
collect the amount of any such Guaranty Fee and to add
interest at the rate of ________ percent (_____%) per annum
from the disbursement date of the Loan to which such Guaranty
Fee relates, plus any costs (including attorneys' fees and
expenses) incurred by ▇▇▇▇ in collecting or attempting to
collect such Guaranty Fee from the LENDER.
7
d. Anything in the Program Guidelines to the contrary
notwithstanding, if the LENDER is required under the terms of
a Promissory Note to refund all or part of the Guaranty Fees
identified above to a Borrower, ▇▇▇▇ will refund all or part
of the Initial Guaranty Fee it has received and the Custodian
will refund all or part of any Subsequent Guaranty Fee it has
received (in each case related to the refund to such Borrower)
to the LENDER upon being so advised by the LENDER in writing.
3.4 If ▇▇▇▇ shall have purchased a Loan pursuant to Section 2.1 above, the
LENDER will promptly repurchase such Loan upon request from ▇▇▇▇ if (i)
▇▇▇▇ succeeds, after purchasing, in obtaining from the Borrower three
full consecutive on-time monthly payments, according to any schedule
permitted by the Program Guidelines, provided that on the date of
TERI's notice to repurchase, the Borrower is within thirty (30) days of
being current on his or her payments on such Loan, and provided further
that this repurchase obligation may be invoked by ▇▇▇▇ only once as to
any Loan (in which case, the Loan shall be considered "rehabilitated");
or (ii) if ▇▇▇▇ should determine that the Loan does not meet the
conditions set forth in subsections b., c. and d. of Section 2.2 above.
With respect to the repurchase of any Guaranteed Loan pursuant to this
Section 3.4, the repurchase price shall be equal to (1) the remaining
unpaid principal balance of such Loan, plus (2) any accrued and unpaid
interest thereon.
3.5 To the extent permitted by applicable law, the LENDER will (i) deliver
to ▇▇▇▇ such reports, documents, and other information concerning the
Loans as ▇▇▇▇ may reasonably require, and (ii) permit independent
auditors, authorized representatives of ▇▇▇▇ and governmental agencies,
if any, having regulatory authority over ▇▇▇▇, to have access to the
operational and financial records and procedures directly applicable to
Loans and to the LENDER's participation in the Program. LENDER will
cause its loan servicer to deliver to ▇▇▇▇ such reports, documents, and
other detailed information concerning each Loan as ▇▇▇▇ may reasonably
require. [LENDER shall provide a monthly report containing the
information set forth on Exhibit B hereto at LENDER's expense]; ▇▇▇▇
shall arrange directly with the loan servicer to receive the report.
Any other reporting or information shall be provided upon TERI's
agreement to reimburse LENDER for its incremental cost of such report.
3.6 If the LENDER should violate any term of this Agreement, it will be
liable to ▇▇▇▇ for all loss, cost, damage or expense sustained by ▇▇▇▇
as a result. The LENDER will indemnify ▇▇▇▇ and hold it harmless from
and against all loss, cost, damage or expense that ▇▇▇▇ may suffer as a
result of claims to the extent they arise out of the LENDER's actions
or omissions relative to the LENDER's participation in the Program
unless such actions or omissions are specifically required by this
Agreement, and do not arise out of TERI's actions or omissions. The
LENDER will similarly indemnify ▇▇▇▇ with respect to any defenses
arising from the LENDER's violation of or failure to comply with any
law, regulation or order, or any term of this Agreement, that may be
raised by a Borrower to any suit
8
upon a Promissory Note. "Expense" includes, without limitation, TERI's
reasonable attorney's fees.
SECTION 4: REPRESENTATIONS AND WARRANTIES
4.1 Each party represents and warrants to the other that its execution,
delivery and performance of this Agreement are within its power and
authority, have been authorized by proper proceedings, and do not and
will not contravene any provision of law or such party's organizational
documents or by-laws or contravene any provision of, or constitute an
event of default or an event which, with the lapse of time or with the
giving of notice or both, would constitute an event of default, under
any other agreement, instrument or undertaking by which such party is
bound. Each party represents and warrants that it has and will maintain
in full force and effect all licenses required under applicable state,
federal, local or other law for the conduct of all activities
contemplated by this Agreement and comply with all requirements of such
applicable law relative to its licenses and the conduct of all
activities contemplated by this Agreement. This Agreement and all of
its terms and provisions are and shall remain the legal and binding
obligation of the parties, enforceable in accordance with its terms
subject to bankruptcy and insolvency laws. The warranties given herein
shall survive any termination of this Agreement.
4.2 The parties acknowledge that ▇▇▇▇ is not an insurer or reinsurer and
the LENDER expressly waives all claims it might otherwise have under
applicable law were ▇▇▇▇ to be held by any court or regulatory agency
to be acting as an insurer or reinsurer hereunder. The only obligations
of ▇▇▇▇ to the LENDER shall be those expressly set forth herein.
SECTION 5: MISCELLANEOUS
5.1 Neither party is or will hold itself out to be the agent, partner, or
joint venturer of the other party with regard to any transaction under
or pursuant to this Agreement.
5.2 Each party's respective rights, remedies, powers, privileges, and
discretions ("Rights and Remedies") shall be cumulative and not
exclusive. No delay or omission by either party in exercising or
enforcing any of its Rights and Remedies shall operate as to constitute
a waiver of them. No waiver by a party of any default under this
Agreement shall operate as a waiver of any subsequent or other default
under this Agreement. No single or partial exercise by a party of any
of its Rights and Remedies shall preclude the other of further exercise
of such Rights and Remedies. No waiver or modification by a party of
the Rights and Remedies on any one occasion shall be deemed a
continuing waiver. A party may exercise its various Rights and Remedies
at such time or times and in such order of preference as it in its sole
discretion may determine. In no event will either party be liable to
the other for special, incidental, or consequential damages, including
but not limited to lost profits, even if advised in advance of the
possibility of the
9
same, or for punitive or exemplary damages, provided that such
exclusions shall not apply to the indemnification against an award of
such damages pursuant to a third party claim.
5.3 This Agreement (including the Program Guidelines and all exhibits and
schedules hereto), together with (i) the Security Documents and (ii)
the Loan Origination Agreement, of even date herewith, between ▇▇▇▇ and
the LENDER ((i) and (ii) together, the "Ancillary Agreements"),
represents the entire understanding of the parties with respect to the
subject matter hereof. This Agreement, together with any
contemporaneous contract concerning credit analysis and the Ancillary
Agreements, supersedes all prior communications whatsoever between the
parties relative in any way to Loans or the LENDER's participation in
the Program. This Agreement may be modified only by written agreement
of the parties hereto, except as may otherwise be set forth herein.
5.4 Any determination that any provision of this Agreement is invalid,
illegal, or unenforceable in any respect shall not affect the validity,
legality, or enforceability of such provision in any other instance and
shall not affect the validity, legality, or enforceability of any other
provision of this Agreement.
5.5 Each of the parties will timely implement, if it has not already, and
will maintain, a reasonable disaster recovery plan. Subject to the
foregoing, no party hereto shall be responsible for, or in breach of
this Agreement if it is unable to perform as a result of delays or
failures due to any cause beyond its control, howsoever arising, and
not due to its own act or negligence and that cannot be overcome by the
exercise of due diligence. Such causes shall include, but not be
limited to, labor disturbances, riots, fires, earthquakes, floods,
storms, lightning, epidemics, wars, hostilities, terrorist acts, civil
disorder, expropriation or confiscation of property, failure or delay
by carriers, interference by civil and military authorities whether by
legal proceeding or in fact and whether purporting to act under some
constitution, decree, law or otherwise, acts of God and perils of the
sea.
5.6 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the
conflict of laws provisions thereof.
5.7 This Agreement will be binding on the parties' respective successors
and assigns. Except as otherwise set forth in this Section 5.7, this
Agreement may not be assigned by either party without the other's
written consent.
a. The LENDER may, without TERI's consent, assign any Loan,
together with the provisions hereof as applicable to such
Loan, to another entity participating in the Program, or to an
SPE formed by the LENDER, in each case upon written notice to
▇▇▇▇.
10
b. ▇▇▇▇ specifically acknowledges that FMC or an SPE sponsored by
FMC is expected to purchase some or all of the Loans, and this
Agreement shall inure to the benefit of FMC or any such SPE
upon such purchase. No notice of such purchase or consent to
the assignment of the LENDER's rights under this Agreement in
connection with a purchase of some or all of the Loans by FMC
or any SPE sponsored by FMC shall be necessary.
c. In assigning any Loan and its rights under this Agreement
relating to such Loan in accordance with Section 5.7(a), (i)
the LENDER's written notice to ▇▇▇▇ must be made within thirty
(30) days after said assignment and must identify each Loan to
which such assignment relates, and (ii) ▇▇▇▇ will fully
cooperate with any Securitization Transaction or other sale of
a portfolio of Loans, provided it is given thirty (30) days
advance written notice of the date that information or
documents are required of it and provided that its reasonable
legal fees and other expenses incurred in connection with such
transaction are reimbursed by the seller of such Loans.
d. Except for any assignment hereunder to FMC or any SPE
sponsored by FMC in connection with a purchase of Loans as
described in subsection b. above, no assignment of Loans or
the LENDER's rights hereunder without TERI's express written
consent shall release the LENDER from any liability to ▇▇▇▇
under this Agreement arising out of the LENDER's ownership of
such Loans (whether arising prior to, as a result of or after
the sale of such Loans by the LENDER) including, without
limitation, the LENDER's obligation to pay any unpaid Guaranty
Fees and to repurchase Loans pursuant to Section 3.4.
e. The Lender acknowledges that ▇▇▇▇ has outsourced or
subcontracted some or all of its administrative functions,
including but not limited to the processing of guarantee
claims, to First Marblehead Education Resources, Inc. In
addition, the Lender acknowledges that ▇▇▇▇ has subcontracted
and may hereafter subcontract any administrative obligations
necessary or convenient to ▇▇▇▇ to perform its obligations
hereunder, and that such subcontracts do not and shall not
require the consent of the LENDER. Such outsourcing or
subcontracting shall not relieve ▇▇▇▇ of its obligations under
this Agreement.
5.8 Notice for any purpose hereunder may be given by any means requiring
receipt signature, or by facsimile transmission confirmed by first
class mail. In the case of ▇▇▇▇, notices should be sent to its
President, and if by fax, to (▇▇▇) ▇▇▇-▇▇▇▇. In the case of the LENDER,
notices should be sent to its , and if by fax, to . Either party may
from time to time change the person, address or fax number for notice
purposes by formal notice to the other party.
5.9 [For the [PROGRAM NAME], ▇▇▇▇ has established a system of risk-based
pricing based on tiered guaranty fees and/or tiered interest rates that
correspond to the actual risk of lending to borrowers with lesser
creditworthiness ("Risk-Based
11
Pricing") The Risk-Based Pricing system is set forth in the Program
Guidelines attached hereto. ▇▇▇▇ bases Risk-Based Pricing upon the
projected net cost of defaults, which ▇▇▇▇ believes provides business
justification for the pricing levels set forth in the Risk-Based
Pricing it has offered to LENDER. Any representation or warranty of
compliance with federal or state law made by ▇▇▇▇ in this Guaranty
Agreement, or the Loan Origination Agreement between the parties of
same date, that may relate to Risk-Based Pricing does not extend beyond
the pricing actually included in the Program Guidelines attached
hereto.]
SECTION 6: CHANGES TO PROGRAM GUIDELINES
The parties agree that the Program Guidelines will need to be updated and
modified from time to time to respond to changed conditions. The parties intend
to make such modifications in a manner that does not interfere with the ordinary
advertising and origination cycle for education loans. Amendments necessary to
meet state or federal regulatory requirements may be made at any time. With
respect to all other changes, the parties shall exchange requests for
modification of the Program Guidelines, including without limitation any
requested changes to the provisions of the Program Guidelines concerning the
Guaranty Fees, in the first part of the first calendar quarter of each year.
Each party shall respond in writing to proposals from the other within thirty
(30) days, and both parties will attempt to resolve any differences within
thirty (30) days after receiving a response to a request. All modifications must
be mutually acceptable. Any modifications approved by the parties and not
requiring system adjustments by the LENDER's loan servicer shall take effect
within thirty (30) days after approval. Modifications requiring system
adjustments by the LENDER's loan servicer shall take effect as soon after
approval as such servicer shall be able to adjust its systems to accept loans
made on the modified terms, and the LENDER agrees to take such actions as are
reasonably necessary to ensure that such servicer adjusts its systems as
promptly as practicable. The parties shall use their best efforts to conclude
all negotiations of proposed changes prior to May 1 of each year. The foregoing
process shall not apply to modification of the Servicing Guidelines, which are
subject to the modification process contained therein.
SECTION 7: TERM AND TERMINATION
7.1 The initial term of this Agreement shall commence on[______], and shall
continue until the first anniversary of such date. Thereafter, this
Agreement shall automatically renew for successive one-year terms
unless either party provides written notice of non-renewal and
termination not less than ninety (90) days prior to the end of the
then-current term.
7.2 In the event that the parties are unable to agree on a proposed
modification to the Program Guidelines as provided in Section 6, above,
the party proposing the modification shall have the option of
terminating this Agreement effective immediately upon written notice of
termination to the other party, provided that the party desiring to
exercise this option to terminate does so within thirty (30)
12
days of the end of the thirty (30) day period provided in Section 6 for
the resolution of any differences.
7.3 To the extent permitted by applicable law, if either party should
become subject to bankruptcy, receivership, or other proceedings
affecting the rights of its creditors generally, the party becoming
subject to such proceedings will promptly notify the other party
thereof, and this Agreement will be deemed terminated immediately upon
the initiation of such proceedings without the need of notice to the
other party.
7.4 Termination shall be prospective only and shall not affect the
obligations of the parties hereto which were incurred prior to such
termination or any of the warranties and indemnities contained herein
or the provisions of Section 8 below (regarding confidentiality). Not
less than thirty (30) days prior to the effective date of termination,
▇▇▇▇ may, by additional notice to the Lender, terminate its obligation
to assume the guaranty of all or any subset of otherwise qualifying
Loans as to which a commitment to lend is made after the Lender's
receipt of such additional notice. In the absence of such additional
notice ▇▇▇▇ will, subject to the terms and conditions of this
Agreement, assume the guaranty of all Loans as to which a commitment to
lend is made prior to the effective date of termination. In the event
this Agreement terminates or expires and only one disbursement of a
multi-disbursement loan has been made prior to that date, the other
disbursement will also be guaranteed pursuant to the terms of this
Agreement.
SECTION 8: CONFIDENTIALITY; RESTRICTIONS ON USE OF INFORMATION
8.1 During the course of negotiating this Agreement and hereafter during
the pendency of this Agreement, the parties from time to time may have
revealed or may hereafter reveal to each other certain information
concerning their respective business plans, business methods, financial
data and projections, and/or information that is not generally known in
the student loan industry, including, without limitation, the terms and
conditions of this Agreement. All the foregoing is referred to herein
as "Confidential Information." In TERI's case, its Confidential
Information also includes, but is not limited to, information
concerning the operation of its telephone and on-line loan applications
procedures, and its online credit scoring system. Each party will use
reasonable efforts to preserve the confidentiality of Confidential
Information contained herein or disclosed to it by the other party,
such efforts to be not less vigilant than those that such party uses to
protect its own proprietary information. The foregoing is subject to
the following qualifications:
a. No party will be so bound with respect to information that is
or becomes public knowledge in the student loan industry (but
if it does so through any fault of such party that fault will
be considered a material breach of this Agreement);
13
b. No party will be so bound with respect to information that is
now or hereafter comes into its possession by its own
documented independent efforts or from a third party who, so
far as the recipient party has reason to believe, is under no
comparable restriction with respect to such information;
c. Either party may disclose Confidential Information to its
attorneys, auditors, agents, and consultants who are bound to
maintain the confidentiality of such information;
d. Either party may disclose Confidential Information in the
context of any regulatory review of its operations or as
compelled by law, regulation, or court order, provided that in
the context of a court order the party required to disclose
will (i) give the other party prompt written notice upon
learning of the requirement so that the other party may take
appropriate action to prevent or limit the disclosure, (ii)
consult with the other party and use all reasonable efforts to
agree on the nature, form, timing and content of the
disclosure, (iii) except as otherwise agreed under (ii),
disclose no more than its counsel advises is legally required,
and (iv) inform the Court and all counsel concerned that such
information is and should be treated as confidential
information of the other party; and
e. Information concerning Loans and Borrowers that comes into
TERI's possession shall not be considered Confidential
Information of the Lender.
f. Without limiting the foregoing, ▇▇▇▇ may disclose any of the
LENDER's Confidential Information to any entity to which ▇▇▇▇
subcontracts its obligations under this Agreement pursuant to
Section 5.7(e) hereof.
8.2 In accordance with the provisions of Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act (the "GLB Act") and Federal Reserve Board Regulation P ("Regulation
P"), ▇▇▇▇ agrees, as a financial institution subject to Regulation P,
to respect and protect the security and confidentiality of any
"nonpublic personal information" (as defined in the GLB Act and
Regulation P) relating to applicants for Loans and to Borrowers,
including, where applicable, the restrictions on the re-use and
disclosure of such information set forth in the GLB Act and Regulation
P.
8.3 Without limiting the foregoing, ▇▇▇▇ may retain as its own property and
use for any lawful purpose any or all aggregated or de-identified data
concerning Loan applicants and Borrowers, which does not include the
name, address or social security number of the Loan applicants or
Borrowers. ▇▇▇▇ may sell, assign, transfer or disclose such information
to third parties including, without limitation, FMC, who may also use
such information for any lawful purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, ▇▇▇▇ and the LENDER have caused this Agreement to
be executed by their duly authorized officers under seal as of the day and year
indicated above.
THE EDUCATION RESOURCES NAME OF BANK
INSTITUTE, INC.
By:_________________________________ By:_________________________________
Print Name:_________________________ Print Name:_________________________
Title:______________________________ Title:______________________________
15
TABLE OF EXHIBITS
Exhibit A - Program Guidelines for [NAME OF PROGRAM]
Exhibit B - Servicer Data Requirements
Schedule 3.3 - Guaranty Fee Amounts
16
EXHIBIT B
SERVICER DATA REQUIREMENTS
For Loans Serviced at the Pennsylvania Higher Education Assistance
Agency: Reports MR-50 and MR-53 or reports containing at least the
following information:
1. DATA TO BE PROVIDED ON A MONTHLY BASIS AT MONTH END.
2. DATA IS AT THE LOAN RECORD LEVEL. IN OTHER WORDS, A BORROWER WITH MORE
THAN ONE LOAN HAS MORE THAN ONE ENTRY
3. DATA TO BE PROVIDED EITHER ON TAPE, CD-ROM OR BY ELECTRONIC MEANS
FIELD NAME FIELD DESCRIPTION FORMAT LENGTH / SPECIAL FORMAT
BOR_SSN Borrower Social Security Number Number 9
BOR_LN Borrower Last Name Text 25
BOR_FN Borrower First Name Text 15
BOR_ST State Of Borrower Residence Text 2
SEQ_NUM Unique Loan Sequence Number Number 15
STU_SSN Student Social Security Number Number 9
COS_SSN Cosigner Social Security Number Number 9
LON_TYP Loan Program Type Text 8
B_SCR Borrower Credit Score Number 3
S_SCR Student Credit Score Number 3
C_SCR Co-Borrower Credit Score Number 3
PROG_TIR Loan Program Tier (if applicable) Text 3
SCL_COD Original School DOE Code Text 8
SCL_TYP Original School Type (4 yr., 5 yr, etc.) Text 50
SCL_ST State Where School Located Text 2
LEND_COD Lender DOE Code Text 8
TERM_BEG Loan Period Start Date Date 10 (mm/dd/yyyy)
TERM_END Loan Period End Date Date 10 (mm/dd/yyyy)
INT_RATE Current Interest Rate Number (Percent) 6 (99.999)
NOTE_DAT Date of Promissory Note Date 10 (mm/dd/yyyy)
DISB_AMT Total Amount Disbursed Number 9 (999999.99)
ORIG_PRI Original Principal Amount Number 9 (999999.99)
GFE_DISP Total Guarantee Fee at Disbursemnet Number (Percent) 6 (99.999)
GFE_DISD Total Guarantee Fee at Disbursemnet Number 9 (999999.99)
GFE_REPP Total Guarantee Fee at Repayment Number (Percent) 6 (99.999)
GFE_REPD Total Guarantee Fee at Repayment Number 9 (999999.99)
GFEE_LOL Total Guarantee Fee - Life of Loan Number (Percent) 6 (99.999)
GFEE_PAY Life of Loan Guarantee Fee Payment Frequency Text W = Weekly
Q = Quarterly
A = Annually
CURR_PRI Current Outstanding Principal Amount Number 9 (999999.99)
CURR_INT Current Outstanding Interest Amount Number 9 (999999.99)
17
CAP_AMT Total Amount Capped Interest Number 9 (999999.99)
FULL_DIS Fully Disbursed Indicator (Y/N) Text 1
DISB1_DT Date of First Disbursement Date 10 (mm/dd/yyyy)
DISB1_AM Amount of First Disbursement Number 9 (999999.99)
LAST_DIS Date of Last Disbursement Date 10 (mm/dd/yyyy)
LAST_AM Amount of Last Disbursement Number 9 (999999.99)
CURR_OWN Current Owner of Loan (DOE Code) Text 8
REPAY_ST Repayment Start Date Date 10 (mm/dd/yyyy)
EXP_POFF Expected Payoff Date Date 10 (mm/dd/yyyy)
INI_TERM Initial Disclosed Repayment Term Number 3
REM_TERM Remaining Repayment Term Number 3
LAST_ENR Last Known Enrollment Date Date 10 (mm/dd/yyyy)
GRAD_DAT Expected Grad Date Date 10 (mm/dd/yyyy)
GRAC_ST Grace Period Start Date Date 10 (mm/dd/yyyy)
GRAC_END Grace Period End Date Date 10 (mm/dd/yyyy)
DEF_ST Deferment Start Date Date 10 (mm/dd/yyyy)
DEF_END Deferment End Date Date 10 (mm/dd/yyyy)
DEF_TYP Deferment Type Text 10 (mm/dd/yyyy)
FOR_ST Forbearance Start Date Date 10 (mm/dd/yyyy)
FOR_END Forbearance End Date Date 10 (mm/dd/yyyy)
FOR_TYP Forbearance Type Text 50
SCH_PMT Amount of Next Scheduled Payment Number 9 (999999.99)
LAST_PRI Last Principal Payment Amt Number 9 (999999.99)
LAST_INT Last Interest Payment Amt Number 9 (999999.99)
LAST_DAT Last Payment Date Date 10 (mm/dd/yyyy)
ZERO_IND Zero Balance Reason Text 50
DAYS_DELQ Number of Days Account Delinquent Number 3
DELQ_AMT Amount of Delinquency Number 9 (999999.99)
PRE_CL_A Pre-Claims Placement Amount Number 9 (999999.99)
PRE_CL_D Pre-Claims Placement Date Date 10 (mm/dd/yyyy)
CLM_AMT Claim Placement Amount Number 9 (999999.99)
CLM_DT Claim Placement Date Date 10 (mm/dd/yyyy)
CLM_PAYD Claim Payment Date Date 10 (mm/dd/yyyy)
CLM_PAYA Claim Payment Amount Number 9 (999999.99)
CLM_REJD Claim Reject Date Date 10 (mm/dd/yyyy)
DELQ_30 Number of Times Delinquent 30 Days Number 3 (999)
DELQ_60 Number of Times Delinquent 60 Days Number 3 (999)
DELQ_90 Number of Times Delinquent 90 Days Number 3 (999)
DELQ_120 Number of Times Delinquent 120 Days Number 3 (999)
DELQ_150 Number of Times Delinquent 150 Days Number 3 (999)
DELQ_180 Number of Times Delinquent 180 Days Number 3 (999)
SALE_PRIN Amount of Principal Sold (if applicable) Number 9 (999999.99)
SALE_INT Amount of Interest Sold (if applicable) Number 9 (999999.99)
SALE_DAT Date of Loan Sale (if applicable) Date 10 (mm/dd/yyyy)
18
BOND_ISS Purchaser Bond Issue (if applicable) Text 8
RPT_DATE Date Of Report Date 10 (mm/dd/yyyy)
ORIG_REF Originator Reference Number Text 15
GUAR_REF Guarantor Reference Number Text 15
19